House GOP closing in on debt limit package

House Republicans are moving toward introducing a bill that would lift the debt limit until the first quarter of 2015, while patching the Medicare reimbursement rate for nine months and reversing recent changes to some military retirement benefits, according to multiple sources familiar with internal deliberations.

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Patching the reimbursement rate for doctors who treat Medicare patients — known as the Sustainable Growth Rate or “doc fix” — and changing cost of living benefits for the military could be costly. Under the emerging plan, House Republicans would seek to pay for those items with an extra year of cuts to mandatory spending and changes to pension contributions.

The House needs to act fast. Treasury Secretary Jack Lew on Friday sent a letter to congressional leadership that said that the “extraordinary measures” that the federal government uses to fund operations after the nation has reached the debt ceiling will not “last beyond Thursday, February 27.”

“At that point, Treasury would be left with only the cash on hand and any incoming revenue to meet our country’s commitments,” Lew wrote in the letter to congressional leaders, which was obtained by POLITICO.

Hiking the debt ceiling until February or March of 2015 could have tremendous political benefit for both parties. It would place the next borrowing limit deadline after the 2014 midterm elections.

This plan, which sources describe as the leadership’s top option for lifting the borrowing limit, would suspend the debt limit until February or March of 2015. If this cannot pass, Speaker John Boehner (R-Ohio) would likely be left to pass a debt limit increase without policy strings attached.

House Republicans have had a tough time coalescing around a debt limit plan.

Top GOP lawmakers proposed several legislative add-ons, including language that would mandate the construction of the Keystone XL pipeline and tweaking the military COLA formula. But rank-and-file Republicans balked: there’s a healthy pocket of them who would never vote to raise the debt limit, and others who thought the proposed legislative add-ons were too paltry.

Any bill would need to be presented to rank-and-file lawmakers before a vote — but time is short. The House is only in session for three days next week — it returns Monday evening and recesses Wednesday. The chamber then recesses for a week, and returns Feb. 25 — two days before Treasury says the debt ceiling must get lifted.

This plan could create some consternation in corners of the Capitol. For example, Republicans and Democrats have working to craft a more permanent SGR fix. The military COLA change was part of the recent bipartisan budget deal, written by Rep. Paul Ryan (R-Wis.) and Sen. Patty Murray (D-Wash.). Ryan recently told POLITICO that reversing the COLA changes would not blow up the budget accord.